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ANALYSING PANEL DATA

VIEWS: 10 PAGES: 19

									Housing Markets and Migration:
 Evidence from New Zealand


 David C Maré and Steven Stillman
              Motu
                Overview
Q: How does population change, international
 migration, including the return migration of New
 Zealanders abroad, as well as internal migration
 impact local housing markets
   – Time-series relationship in New Zealand
   – Evidence from the literature on the US
   – Data description
   – Graphical analysis
   – Regressions
                                                                         Background
                                                             4-quarter change in house prices vs 4-quarter migration



               22.5%                                                                                                                                                                                                   2.25%



                                 House price
               15.0%             change                                                                                                                                                                                1.50%




                                                                                                                                                                                                                                Net migration
House prices




                7.5%                                                                                                                                                                                                   0.75%




                0.0%                                                                                                                                                                                                   0.00%




                -7.5%                                                                                                                                                                                                  -0.75%




               -15.0%                                                                                                                                                                                                  -1.50%
                        1986:1
                                  1987:1
                                           1988:1
                                                    1989:1
                                                              1990:1
                                                                       1991:1
                                                                                1992:1
                                                                                         1993:1
                                                                                                  1994:1
                                                                                                           1995:1
                                                                                                                    1996:1
                                                                                                                             1997:1
                                                                                                                                      1998:1
                                                                                                                                               1999:1
                                                                                                                                                        2000:1
                                                                                                                                                                 2001:1
                                                                                                                                                                          2002:1
                                                                                                                                                                                   2003:1
                                                                                                                                                                                            2004:1
                                                                                                                                                                                                     2005:1
                                                                                                                                                                                                              2006:1
                 Coleman and Landon-Lane (2007) use a structural VAR
                   model to examine this relationship and find that 1% net
                   immigration inflow leads to 10% increase in house prices
                    US Literature
Saiz (2003) - Examines Mariel Boatlift and finds that nearly a 1-1
  relationship between the increase in Miami’s renter population and
  rents compared to other comparable cities
Saiz (2006) - Examines relationship between immigrant inflows, rents
  and house values over time across MSAs using IV based on the
  settlement pattern of prior immigrants from same region. An
  immigration inflow equal to 1% of a city’s population is associated
  with increases in average rents and housing values of about 1%.
Ottaviano and Peri (2007) - Estimate joint model of impact of
  immigrant inflows on wages and rents. Immigration produces a
  positive effect on the wages of native workers with elasticities in the
  0.35 −0.55 range and a positive effect on housing expenditure with
  elasticities roughly between 0.6−0.8 when estimated on rents.
Saiz and Wachter (2006) - Examine relationship between immigration
  house prices within metropolitan areas and find that values have
  grown relatively more slowly in area of immigrant settlement.
            Population Data
NZ Census 1986, 1991, 1996, 2001, 2006
  – Sample: All individuals aged 18+
  – New Immigrants: Individuals not born in NZ that
    resided outside NZ 5-years previously
  – Return New Zealanders: Individuals born in NZ that
    resided outside NZ 5-years previously
  – Movers vs. Stayers: Movers lived in a different place in
    NZ 5-years ago based on a particular geography
  – Local Areas: 140 Functional labour markets (LMAs) /
    73 Territorial Local Authorities (county) / 58 LMAs / 16
    Regional Council (states)
        Housing Market Data

Quotable Value New Zealand - Annual data covering
 1982-2006 on all sales and valuations at block level
  – Sales Prices: Mean Sales Prices for Standalone Homes
    and Flats in each Census year and geographic area
Tenancy New Zealand - Annual data covering 1992-
  2006 on weekly rents at the area level
  – Rents: Mean Weekly Rent for Standalone Homes and
    Flats in each Census year and geographic area
     Sample Characteristics
                                                    1986-1991 1991-1996        1996-2001   2001-2006
                             Local Housing Market Characteristics - Changes
Percent Change in Mean Sales Price for Houses          0.002          0.235       0.078      0.654
                                                      (0.010)        (0.014)    (0.013)     (0.019)
Percent Change in Mean Sales Price for Flats          -0.038          0.174       0.016      0.566
                                                      (0.012)        (0.020)    (0.021)     (0.027)
Percent Change in Mean Weekly Rent for Houses                         0.127      -0.038      0.191
                                                                     (0.012)    (0.006)     (0.010)
Percent Change in Mean Weekly Rent for Flats                          0.122      -0.055      0.136
                                                                     (0.016)    (0.007)     (0.013)
                                Local Population Characteristics - Changes
Percent Change in Population                           0.057          0.048       0.045       0.085
                                                      (0.004)        (0.005)    (0.005)     (0.005)
New Immigrants / Population 5-Years Ago                0.035          0.048       0.057       0.079
                                                      (0.002)        (0.003)    (0.003)     (0.004)
Return NZers / Population 5-Years Ago                  0.019          0.024       0.018       0.025
                                                      (0.000)        (0.001)    (0.000)     (0.001)
Change in Immigrants / Population 5-Years Ago         -0.019         -0.022      -0.026      -0.019
                                                      (0.001)        (0.001)    (0.001)     (0.001)
Change in NZers / Population 5-Years Ago               0.022         -0.002      -0.004       0.000
                                                      (0.003)        (0.003)    (0.003)     (0.003)
          Changes in House Sale Prices and
                                             LMA
          Population Changesinby Sale Prices and Population Changes
                      Figure 1: Change House
                               Percentage Change in Population              Percentage Change in Immigrants              Percentage Change in New Zealanders
                     1
                  .75
                    .5
by Year




                  .25
                     0
                 -.25
                   -.5
                 -.75
                    -1

                     1
                  .75
                    .5
                  .25
                     0
                 -.25
                   -.5
                 -.75
                    -1

                     1
                  .75
                    .5
                  .25
                     0
                 -.25
                   -.5
                 -.75
                    -1
                         -.2      -.1        0         .1        .2   -.2   -.1           0            .1     .2   -.2     -.1           0            .1       .2
            The size of the circles are proportional to the average current population and population five years prior in each LMA
            The solid line is the best population weighted linear fit
The Relationship between the Local
Population and the Local Housing Market

Ln( House Pr ice) LMA,t  t   Ln( Pop) LMA,t   X LMA,t  eLMA,t

                  Log Mean Sales Price for   Log Mean Weekly Rent for
                           Houses                     Houses
Log Population    0.194**         0.070**     0.169**        0.061**
                   (0.026)        (0.017)     (0.017)        (0.010)
Geo/Years            675            675         399            399
R-Squared            0.76           0.94        0.80           0.96
Covariates            No            Yes          No            Yes
The Relationship between Changes
in the Local Population and Changes
in the Local Housing Market
Ch( HP) LMA(t ,t 5)  t   Ch( Pop) LMA(t ,t 5)  X LMA(t ,t 5)  eLMA,t
 Ch( z) LMA(t ,t 5)  ( zLMA,t  zLMA,t 5 ) zLMA,t 5

                     % Change Mean Sales Price for   % Change Mean Weekly Rent
                                Houses                       for Houses
% Change in Pop         0.257*          0.298          0.188*           0.123
                        (0.129)        (0.163)         (0.094)        (0.122)
Geo/Years                 532            532             277             277
R-Squared                0.70           0.80            0.55            0.76
Covariates                No             Yes             No              Yes
The Relationship between Changes
in Components of the Local Population and
Changes in the Local Housing Market
Ch( HP) LMA(t ,t 5)  t  1 ( NewImmLMA,t / PopLMA(t 5) )  2 (Re tNZ LMA,t / PopLMA(t 5) )
                      3Ch(Im m) LMA(t ,t 5)  4Ch( NZ ) LMA(t ,t 5)  X LMA(t ,t 5)  eLMA,t
                  % Change Mean Sales Price                       % Change Mean Rental
                          for Houses                                 Bond for Houses
  New Immigrants     -0.708        -0.228                          -0.438        -0.168
                    (0.376)       (0.348)                         (0.263)       (0.280)
  Return NZers      9.079**       6.083**                          3.263        3.845*
                    (2.484)       (2.003)                         (2.109)       (1.890)
  % Change in Imm    1.599         1.464                           -0.132        -1.299
                    (1.120)       (1.350)                         (1.102)       (0.735)
  % Change in NZ     -0.268        -0.336                          0.331         0.230
                    (0.309)       (0.299)                         (0.267)       (0.300)
  Geo/Years           532           532                             277           277
  R-Squared           0.72          0.80                            0.58          0.77
  Covariates           No           Yes                              No           Yes
The Relationship between Inflows of New Immigrants
and Changes in the Local Housing Market
Ln( HP) LMA(t ,t 5)  t  Ln( NewImmLMA,t / PopLMA(t 5) )  X LMA(t ,t 5)  eLMA,t

 Instrument for NewImm using the location of previous
   immigrants from the same region of birth (13 regions)
                   Change in Log Mean Price for Houses Change in Log Mean Rental for Houses
                          OLS                IV               OLS                 IV
Log Inflow Rate of 0.023** 0.059** 0.009 0.012 0.004 0.058** -0.010 -0.002
  New Immigrants (0.006) (0.017) (0.004) (0.035) (0.004) (0.016) (0.005) (0.026)
Geo/Years            531      531      531       531      277      277     277        277
R-Squared            0.70     0.80     0.70      0.80    0.57      0.80    0.57       0.79
Covariates            No      Yes      No        Yes      No       Yes     No         Yes
 The Relationship between Changes
 in Components of the Local Population and
 Changes in Neighbourhood Housing Markets
Ch( HP) LMA(t ,t 5)   LMA,t  1 ( NewImmLMA,t / PopLMA(t 5) )  2 (Re tNZ LMA,t / PopLMA(t 5) )
                      3Ch(Im m) LMA(t ,t 5)  4Ch( NZ ) LMA(t ,t 5)  X LMA(t ,t 5)  eLMA,t
                                % Change Mean Sales Price         % Change Mean Rental
                                         for Houses                   Bond for Houses
       New Immigrants             -0.120*          -0.075         -0.172**       -0.181**
                                  (0.058)         (0.074)          (0.046)        (0.039)
       Return NZers               2.783**        1.202**           0.632**         0.117
                                  (0.283)         (0.372)          (0.177)        (0.172)
       % Change in Imm             -0.131          -0.058           -0.030         0.007
                                  (0.067)         (0.059)          (0.042)        (0.028)
       % Change in NZ              0.071            0.081          0.121**        0.112**
                                  (0.048)         (0.044)          (0.022)        (0.024)
       Geo/Years                    5894            5894             3017           3017
       Local Area/Years              423             423             176             176
       R-Squared                    0.02            0.09             0.02           0.08
       Covariates                    No             Yes               No            Yes
                Conclusions
• A 10% pop increase in a local labour market is associated
  with a 3% increase in house prices and a 2% increase in
  rents controling for aggregate changes over time
• Decomposing this change:
   – locations with 2 percentage point higher inflow rates of return
     migrants have 12-18% higher house prices and 8% higher rents.
   – no other components are significantly related to house prices
• A weak OLS relationship between new immigrant inflows
  and house prices, but once controlling for the endogenous
  location choice of immigrants, there is no relationship
• House prices are insignificantly different in areas within
  local labour markets with greater inflows of new immigs
            Changes in House Sale Prices and
            Population Changes by LMAPopulation Changes by Year
                       Figure 2: Change in House Sale Prices and
                                Percentage Change in Population              Percentage Change in Immigrant Population Share              Percentage Change in NZ-Born Population Share
                     1
                  .75
                    .5
1986-1991




                  .25
                     0
                 -.25
                   -.5
                 -.75
                    -1

                     1
                  .75
                    .5
1991-1996




                  .25
                     0
                 -.25
                   -.5
                 -.75
                    -1

                     1
                  .75
                    .5
1996-2001




                  .25
                     0
                 -.25
                   -.5
                 -.75
                    -1

                     1
                  .75
2001-2006




                    .5
                  .25
                     0
                 -.25
                   -.5
                 -.75
                    -1
                         -.2   -.1            0              .1   .2   -.2      -.1                0                 .1        .2   -.2      -.1               0                .1        .2

              The size of the circles are proportional to the average current population and population five years prior in each LMA
              The solid line is the best population weighted linear fit
The Relationship between Changes in the Local Popuation
and Changes in the Local Housing Market by Year
                 Change in Log Mean       Change in Log Mean
                    Price for Houses     Rental Bond for Houses
1986 - 1991       0.701**       0.535
                  (0.200)      (0.311)
1991 - 1996       1.604**       0.410     0.969**      0.421
                  (0.211)      (0.337)    (0.186)     (0.258)
1996 - 2001        0.347        0.005      0.086       0.232
                  (0.227)      (0.403)    (0.109)     (0.241)
2001 - 2006      -1.382**      -1.320*    -0.444*     -0.322
                  (0.328)      (0.591)    (0.181)     (0.264)
Covariates          No           Yes        No          Yes
   Individual Summary Statistics
                                                           Internal     Internal     In Same
                      Total         New       Returning                                          In Same
                                                          Migrants -   Migrants -     LMA -
                    Population   Immigrants     Kiwis                                           LMA - Kiwi
                                                             Imm          Kiwi      Immigrant
Own Home               67%          43%          58%        53%           47%          72%          73%
Age                    44.3         36.0         34.9        50.3         45.3         43.9         37.0
Aged 18-24             15%          20%           9%         7%           14%          14%          26%
Aged 25-64             70%          75%          89%        70%           69%          71%          66%
Aged 65+               16%          5%            2%        23%           17%          15%          8%
No Qualifications      29%          11%          15%        27%           33%          19%          25%
School Quals           28%          32%          29%        28%           27%          30%          31%
Post-School Quals      24%          21%          31%        23%           24%          25%          25%
University Degree      10%          25%          20%        12%           7%           17%          11%
Missing                9%           12%           5%        11%           9%            8%          6%
Full-Time W/S          39%          38%          51%        35%           39%          37%          44%
Part-Time W/S          9%           8%            8%         8%           9%            7%          8%
Full-Time Other        12%          8%           12%        11%           12%          10%          9%
Part-Time Other        3%           3%            3%         3%           3%            3%          3%
Unemployed             4%           7%            6%         4%           4%            6%          7%
NILF                   33%          36%          20%        40%           33%          36%          29%
Real Income           26,180       21,673       31,922     25,513       26,688       25,681       25,249
Missing Income         6%           12%           4%         7%           5%            5%          5%
Non-Family             27%          31%          31%        23%           25%          33%          38%
Couple - No Kids       27%          23%          25%        29%           27%          28%          23%
Couple - Kids          38%          40%          35%        41%           39%          33%          31%
Single - Kids          9%           5%            8%         7%           9%            6%          8%
% of Population                     5%            2%         2%           12%          15%          64%
Individuals         12,623,493    592,899      254,997     272,133     1,568,559    1,903,527    8,031,381
       Probit Regression Estimates of
       Likelihood of Homeownership

                                                  Individual    LFS and      Household    Region of
                      No Controls    Year FEs                                                           LMA FEs
                                                    Demos       Income        Demos         Birth

New Immigrants             -0.307       -0.296        -0.272         -0.262         -0.210   -0.217         -0.212
                            (458)        (263)         (112)           (69)           (89)     (88)           (90)
Returning Kiwis            -0.167       -0.166        -0.149         -0.145         -0.095   -0.095         -0.092
                            (145)        (139)         (112)          (107)          (106)     (60)           (59)
Internal - Immigrant       -0.188       -0.186        -0.207         -0.200         -0.136   -0.151         -0.150
                             (54)         (54)          (48)           (47)           (42)     (42)           (41)
Internal - Kiwi            -0.251       -0.253        -0.212         -0.207         -0.126   -0.125         -0.123
                             (61)         (61)          (65)           (62)           (56)     (40)           (40)
Stayer - Immigrant         -0.003        0.000        -0.025         -0.022         -0.019   -0.027         -0.024
                            (183)        (184)         (151)          (147)          (119)    (118)          (116)
Individuals              5,207,244 5,207,244 5,207,244 5,207,244 5,207,244 5,207,244 5,207,244
Notes: Differences are relative to New Zealanders living in the same LMA as five-years-ago. Control variables are
added progressively to each specification. Marginal effects with t-stats in paretheses.
 The Relationship between Different
 Components of the Local Population
                                                                          Net Change in Settled
                 Change in Population   Net Change in Settled NZers                                     Return New Zealanders     New Immigrants
                                                                                Immigrants
                                                                       1655 Area Units (n=6620)
New Immigrants   0.799**      0.840**     -0.109**         0.051         -0.191**       -0.358**        0.099**      0.147**
                 (0.078)      (0.092)      (0.042)       (0.050)          (0.045)        (0.051)        (0.010)       (0.015)
Return NZers     2.394**      2.899**       0.243        0.782**         -1.088**       -0.685**                                2.239**     1.801**
                 (0.322)      (0.372)      (0.204)       (0.257)          (0.098)        (0.115)                                (0.163)     (0.113)
                                                                140 Local Labour Market Areas (n=560)
New Immigrants   0.846**      0.696**     -0.066**      -0.133**         -0.296**       -0.407**        0.208**      0.236**
                 (0.027)      (0.057)      (0.011)       (0.042)          (0.024)        (0.021)        (0.010)       (0.027)
Return NZers     3.454**      2.095**       -0.082        0.481*         -1.332**       -1.126**                                3.868**     1.741**
                 (0.220)      (0.143)      (0.082)       (0.213)          (0.078)        (0.139)                                (0.336)     (0.374)
                                                                 73 Territorial Local Authorities (n=292)
New Immigrants   0.642**      0.631**     -0.194**      -0.144**         -0.370**       -0.495**        0.207**      0.269**
                 (0.101)      (0.101)      (0.042)       (0.046)          (0.068)        (0.036)        (0.016)       (0.049)
Return NZers     2.375**      1.706**      -0.765*        -0.242         -1.635**       -1.291**                                3.774**     2.239**
                 (0.156)      (0.191)      (0.291)       (0.232)          (0.287)        (0.319)                                (0.592)     (0.409)
                                                                 58 Local Labour Market Areas (n=232)
New Immigrants   0.849**      0.668**     -0.065**      -0.168**         -0.291**       -0.375**        0.205**      0.211**
                 (0.046)      (0.076)      (0.022)       (0.058)          (0.031)        (0.027)        (0.009)       (0.029)
Return NZers     3.639**      2.320**       -0.091       0.648**         -1.327**       -0.973**                                4.057**     1.644**
                 (0.092)      (0.146)      (0.119)       (0.235)          (0.109)        (0.166)                                (0.244)     (0.363)
                                                                      16 Regional Councils (n=64)
New Immigrants   0.901**      0.602**     -0.039**       -0.259*         -0.238**         -0.121        0.179**        -0.018
                 (0.015)      (0.148)      (0.010)       (0.104)          (0.007)        (0.067)        (0.007)       (0.066)
Return NZers     4.632**      1.689*        -0.048       1.348**         -1.260**        -0.441*                                4.940**     -0.218
                 (0.189)      (0.724)      (0.064)       (0.345)          (0.032)        (0.188)                                (0.240)     (0.751)
Covariates         No           Yes           No            Yes             No             Yes            No            Yes       No          Yes

								
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